Wednesday, June 29, 2011

Sixth Circuit (sortof) upholds Constitutionality of the individual mandate (and clearly states the penalty is not a tax)

Today the Sixth Circuit Court of Appeals upheld the individual mandate in the PPACA.  Below is a synopsis of the findings of the court and the likely procedural effects on all litigation regarding the individual mandate.  Contrary to the headlines, this is far from a loss for believers in the Constitution.  We just need to dig through the details.

The decision can be found here.

The determination of the Court by a 2-1 decision is as follows:

The individual mandate is not facially unconstitutional. 

This does not mean that the individual mandate is Constitutional in all instances.  It does mean that the challengers to the individual mandate lost, today.

Who came to this decision?

Federal Circuit Court cases are decided (in almost all instances) by a panel of three judges.  In this instance two Circuit Court Judges, Martin and Sutton, and a District Court Judge, Graham, sitting by designation.  Each Judge issued a separate opinion agreeing on a handful of issues and explaining their disagreements on the remainder.

Judge Boyce F. Martin, Jr. determined the individual mandate is Constitutionally permissible under the Commerce Clause

Judge Martin determines that "Virtually everyone participates in the market for health care delivery, and they finance these services by either purchasing an insurance policy or by self-insuring."  p. 17.  His argument essentially runs downhill from there.  As soon as he accepted intellectually that not buying insurance constitutes an affirmative economic action of "self insurance" it is virtually guaranteed he will determine the individual mandate to be Constitutional.

Judge Jeffrey S. Sutton determined that The individual mandate is not facially unconstitutional

In a well thought out and explained opinion Judge Sutton determined first that the Plaintiffs were only bringing a facial challenge, which bears a very high burden.  This burden requires a showing that a law is unconstitutional in all applications.  Even, for example, in a state that already has an individual mandate like (Mitt Romney's) Massachusetts.  This is a very high standard to meet.  The Plaintiffs were unable to show that the individual mandate is unconstitutional in all applications, and therefore their appeal is denied.

Judge Sutton, despite dismissing the challenge, invited future litigants back to the Court to decide this issue in more particularized cases, stating:

"While future challenges to the law have hills to climb, nothing about this view of the case precludes individuals from bringing as-applied challenges to the mandate . . . Just as courts should refrain from needlessly pre-judging the invalidity of a law’s many applications, they should refrain from doing the same with respect to their validity."  pp. 52-53.

The combination of Judge Martin's and Judge Sutton's opinions means the challengers to the individual mandate lost 2-1.  But in such instances as when a majority requires the inclusion of different reasoning, the narrowest reading constitutes the holding of the court.  In this instance Judge Sutton's narrower procedural ruling that the Plaintiffs had not met their burden of proof for a facial challenge constitutes the holding.  The Sixth Circuit has only determined that The individual mandate is not facially unconstitutional.

Judge James L. Graham determined the individual mandate is an unconstitutional regulation of inactivity

I could quote most of Judge Graham's dissenting opinion, but will simply state that I agree with it.

Instead please consider Judge Graham's admonishment that Judges should not fear using the Constitution to overturn political decisions by the legislature stating:

"We must not lose sight of the fact however that the Constitution we interpret and apply itself embodies a resolution of powerful competing political ideologies, including the extent of the power of the federal government – a resolution that the States and the people accepted in the ratification process." p. 63.

Do not overlook some major important victories where all three Judges agreed

1. The Plaintiffs have standing.
2. The case is ripe.
3. The Anti-Injunction Act does not apply.
4. The penalty for not complying with the individual mandate is not a tax.

What does this mean in the Sixth Circuit

The Plaintiffs may seek en banc review where all the judges in the Circuit may hear the case, or there will be a direct appeal to the Supreme Court.  The decision is the hands of the challengers to the individual mandate.

What does this mean for the other challenges to the individual mandate

This outcome is generally good news for the other challenges.  The diverse opinions of the three Judges begs for intervention by the Supreme Court.  The Fourth and Eleventh Circuits where other matters are awaiting a ruling can not rely on the Sixth Circuit opinion to say there is a clear outcome with which they agree.  These cases will likely result in divergent opinions necessitating a ruling from the Supreme Court.  Challengers to the individual mandate should remember that without differing opinions between the Circuit Courts we are far from guaranteed an audience in the Supreme Court.

For my previous posts regarding challenges to the individual mandate click here.


  1. What the court did not say anything about is the PENALTY(s) for non-compliance! Since it is not a tax, then what's the penalty? Based upon what?

  2. Presumably a fine or imprisonment is the penalty. Fines are not considered a tax.

  3. What would a fine be based upon? Can't be income!

  4. The Court does not come out and say it, but they essentially ruled the penlaty is a regulatory fine with no enforcement mechanism. They (all three)certainly determined that the penalty is not a tax under the Anti-Injunction Act.

    The declaration that the penalty is not a tax is a bit of a victory for opponents of the individual mandate. This is because if the penalty is not a tax, then Constitutionality must be based on the Commerce Clause which is more constrained than the taxing and spending powers under the Constitution.

  5. The roots of our government are the individuals whose right to individual choices collectively empower our Constitution.

    It cannot legitimately be argued that from the leaves of the tree of Liberty flow the power to it's roots and still be called free. From the Devine powers our forefathers prayed to, power was meant to flow only from the seeds first, and so indeed it does and always will.

    The Supreme Court needs to carefully decide this issue; there is more at stake here than the narrow constraints of the "Commerce Clause," and empowering the government beyond an individuals right to choose could cause a revolt leading to the other branches of the Gov't for solution, only to result in a potential stalemate!

    Beyond that, hmmm...dare we ask that question?

  6. They stated clearly that the penalty for noncompliance is either a deduction of the penalty from any tax refunds due or a civil suit by the IRS, and the normal enforcement mechanisms for taxes do not apply under this law.

  7. The judges did not discuss this because the penalty is not a tax, but if it were a tax, wouldn't the $750 minimum be unconstitutional as an unapportioned capitation?

  8. Anon 1:36AM

    If the penalty were a tax it is unconstitutional as an unapportioned capitation tax as there is no tax credit for lower income individuals. If the penalty were assessed against all, but a tax credit applied to all who purchase insurance or earn below a certain threshold, then it would be a Constitutional capitation tax.

    I have always found it odd that the original Constitution allows a capitation tax which is a tax on existence. You have but to wake up in the morning, and you are compelled to pay. I guess it is a remnant of the feudal understanding of revenue collection.

  9. People are simply going to opt out of our system because our government is bloated, overbearing and money-hungry.